The shift from the non-oil sector to the oil sector affects the production base of the Nigerian economy and brings about Dutch Disease which rendered the economy susceptible to worries associated with the crude oil price in the international market and crude oil output. Consequently, the need for macroeconomic polies to redirect the economy from the oil to the non-oil based, Thus, the paper assessed policy mix and non-oil output in Nigeria for the period 1990–2019. The objectives of the study was to; examined the effect of fiscal policy in terms of government capital spending and value-added tax (VAT) on non-oil output in Nigeria; and examine the effect of monetary policy in terms of broad money supply and real exchange rate on non-oil output in Nigeria. The study made use of secondary data collected from the Central Bank of Nigeria statistical bulletin and applied the Vector Error Correction Method (VECM). Other tests carried out include: stationary and co-integration tests. The results of the ADF unit root and Johansen co-integration tests showed that all the variables were stationary at order one and were indeed co-integrated. The VECM result showed that the R2 is 65%; this indicated that the model is a good fit. The long-run VECM results showed that there is a long-run causality running from the independent variables to the dependent variable. The short-run VECM result showed that, there is a direct but insignificant relationship between government capital spending and non-oil GDP. Also, there is a direct but insignificant relationship between broad money supply and non-oil GDP. Meanwhile, there is a negative and insignificant relationship between VAT and non-oil output. But the real exchange rate exerts a negative and significant relationship with non-oil output. Owing to the findings, it was concluded that the combination of the policy mix in terms of fiscal and monetary policies are important drivers of the output of the non-oil sector. But constraint in the form of negative relationship between VAT and non-oil output is inimical to the growth of the non-oil sector. Based on these findings, the study recommended amongst others that macroeconomic policies in term of effective use of government revenue from VAT and strong value of the naira in-term of the U.S dollar should be well directed at increase the output of the non-oil sector.
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